Non-fiction reigns almost supreme in this year's £10,000 Guardian First Book Award shortlist, announced today, which also sees a comeback for the short story.

Even more strikingly, it is the year in which readers' groups - the award's unique alternative jury - have reached full verve and confidence of voice. One of them describes a volume which the official judges have shortlisted as "500 pages of penis envy"; and their language about some other titles is just as salty.

The non-fiction titles on the shortlist are: No god but God: The Origins, Evolution and Future of Islam, by Reza Aslan; The Farm, by Richard Benson; Stuart: A Life Backwards, by Alexander Masters; and Maximum City: Bombay Lost and Found, by Suketu Mehta.

The fiction title is Sightseeing, by Rattawut Lapcharoensap, a collection of short stories set in and around Thai tourism. "You give them history, temples, pagodas, traditional dance, floating markets", says one fed-up Thai resort stallholder, "but all they want is to ride some hulking grey beast and to pant over girls."

The Waterstone's readers' groups agreed with the judges on four books. But they would have shortlisted Tash Aw's Harmony Silk Factory, set among Malaysian Chinese, instead of Maximum City, the title accused of penis envy.

The original non-fiction entry was so strong that at least two works which might in another year have gone through to win had to be excluded even from the longlist published in August. The chief judge, Claire Armitstead, the Guardian's literary editor, said yesterday: "After the boom in first novels that we have seen since the turn of the millennium, this seems to be non-fiction's year, with a hugely impressive line-up of contenders for the prize.

"The short story seems to be racing back into fashion, and we are delighted that this is reflected in the shortlist."

The Guardian First Book Award recognises and rewards new writing across fiction and non-fiction. The award, for first-time authors, is open to books from genres including fiction, poetry, biography, memoir, history, politics, science and current affairs.

In discussions to pick the winner, to be announced next month, the readers' groups in London, Glasgow, Nottingham, Bath, Bournemouth and Manchester will be represented on the judging panel by Stuart Broom of Waterstone's. Stuart: A Life Backwards, already one of the year's most praised titles, is the story of the short life of a wild street vagrant. The story's compelling narrative and craft of characterisation delighted eight of the group's 10 readers. Stuart was "universally loved".

The groups' second favourite, No god but God, was praised as a masterpiece of compression and a study with a great power to educate and prompt discussion.

Sightseeing, third favourite, was read "with the ease of an oyster slipping down".

The Farm - rare in modern non-fiction in having no subtitle - is about the slow death of a humble family farm in Yorkshire, written by the farmer's son. Islington readers found it "a boring book about a boring family" but another big city group, Glasgow Sauchiehall Street, was rapturous.

The Manchester Deansgate group characterised Maximum City as "a bloated, shapeless, inartistic book ... like being stuck in a lift with a crashing bore". To others it was honest, larger than life and full of outrageous stories. Armistead said the discussion showed "a real hunger for literature which explains and illuminates the big issues of the day".

Shortlist

No god but God: The Origin, Evolution and Future of Islamby Reza Azlan

The roots of Islam. The social and religious milieu from which the prophet arose, and the passionate contest over the religion's future.

The Farm by Richard Benson

The former editor of The Face magazine goes home to the sale of his family's Yorkshire farm, and depicts rural life today.

Stuart: A Life Backwards by Alexander Masters

Stuart Shorter, an eloquent but chaotic vagrant, threw himself under a train in his 30s. Masters, who met him, tells his life in reverse.

Maximum City: Bombay Lost and Found by Suketu Mehta

Praise and lament for the Indian city, in a book that has already won the Kiriyama prize for new Pacific rim literature.